CAC40: recovers 1.2% (same as Nasdaq) but watch out for interest rates

(CercleFinance.com) - The month of November is off to a much better start than October ended with the CAC40 increasing its gains to +1.
1% and comfortably back above the 7,400 mark (to 7,430).

The CAC40 and Euro-Stoxx50 (+1.2%) are well helped by the employment figures ('NFP') published at 1:30 pm: they are spectacularly far from expectations, with +12,000 jobs created instead of the +150,000 expected (12.5 times less).000 instead of the expected +150,000 (12.5 times less)
But above all, the Labor Department and ADP (which records private sector hiring) seem to be operating on very distant planets, with Wednesday's publication of an estimate of +233.000 jobs (instead of +160,000 at the top of the range, i.e. 50% more than forecast).

Wall Street tried to plug the gaps opened the previous day: the Dow Jones gained +1.2%, the S&P500 +0.9% and the Nasdaq (-2.8% the previous day) rebounded by around +1.32% towards 18.300... despite a sudden deterioration in yields - with no apparent link to the NFP - as the US 10-year fell back +7.35pts to 4.3600%, and the 30-year by +8.5pts to 4.5600% (the highest since July 4).

According to the Department of Labor (DoL), the US economy generated just 12,000 non-farm jobs in October, instead of the median consensus of +113,000, after +223,000 in September.

"Employment continued its upward trend in health care and government, while it declined in temporary help services and in manufacturing due to strikes", explains the DoL.

However, the unemployment rate held steady at 4.1%, in line with expectations, while the labor force participation rate stood at 62.6%, and average hourly earnings rose by 4% year-on-year.

In addition, non-farm job creations for the previous two months were revised, from 159,000 to 78,000 for August and from 254,000 to 223,000 for September, giving a total revision balance of -112,000 for these two months.

Oddo BHF warned at the start of the week that "the labor market undoubtedly suffered from a number of ups and downs in October".

However, no-one was anticipating a -95% drop in job creation, which means that the figure is highly "skewed" and will certainly be revised sharply upwards next month... which is what Joe Biden is predicting, as he was quick to make a reassuring statement on the subject.

Another eagerly-awaited figure is the US manufacturing PMI (calculated by S&P Global): it picked up slightly in October, coming in at 48.5 versus 47.3 the previous month, but remains below the 50 threshold which marks the boundary between expansion and contraction in the sector's activity.

S&P Global points out that production and new orders fell less sharply last month, while inflationary pressures weakened, and that the recent hurricanes caused delays in supply chains.

Published separately, the Institute for Supply Management (ISM) index paints a less rosy picture for the US manufacturing sector, which contracted to 46.5 last month, compared with 47.2 in September.

In Europe, the Bund is suffering the contagion of US rates with +1Pt to 2.401%, our OATs are tightening by +1.7Pts to 3.1500% and Italian BTPs by +0.5Pts to 3.6720%.

On the Forex front, after 6 hours of great calm, things are getting a little livelier, with the Euro shedding -0.35% to $1.0850, and the $-Index posting +0.15% to 104.15.

In Paris, Eiffage reported that it had exceeded the thresholds of 20% and 25% of Getlink's voting rights, and now holds 20.55% of the capital and 27.56% of the voting rights, as a result of the allocation of double voting rights.

Casino reported third-quarter sales of E2.1 billion, down 5.1% as reported on the same period a year earlier (or -1.8% on a like-for-like basis). Adjusted EBITDA for the first nine months of 2024 came to ME402 (-24%), with a margin of 6.4%.

The Viridien geosciences group reported adjusted EBITDA for the first nine months of 2024 up 7% to $298 million, and confirmed its 2024-25 financial roadmap and targets for the current year.

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